Certified Government Financial Manager (CGFM) Practice Exam 2026 - Free CGFM Practice Questions and Study Guide

Before inventory write-offs can be processed, it is crucial to obtain approval by management. This step ensures that there is a formal acknowledgment of the need to remove the inventory from the financial records, which is often necessary for various reasons such as obsolescence, damage, or loss. Management's approval is essential as it signifies that the decision aligns with the organization's policies and financial strategy, maintaining accountability within the financial reporting process.

Management’s role involves assessing the situation surrounding the inventory that is proposed for write-off, evaluating its impact on financial statements, and ultimately deciding whether it is indeed appropriate and justified. This process may include reviewing relevant documentation and ensuring that all internal controls are adhered to.

Although external audits and notifications to stakeholders can have significant roles in overall inventory management and financial reporting, they are not preconditions for processing write-offs. The necessity for secondary approval specified from the Chief Financial Officer may also depend on the organization's internal governance policies, but the fundamental requirement before any write-off action is management approval.